Rajan touch: Sensex ends 200 points higher after seven days of losses

3:30 pm After seven sessions of losses, the Indian markets finally ended in the green today afterReserve Bank of India governor Raghuram Rajan’s last minute press conference and comments were well received across the markets equities, forex and debt alike.

Today’s rally can be largely attributed to Rajan’s promising tone yesterday wherein he took the proactive steps in cooling down the falling rupee and at the same time promising to control inflation through better deficit management.

While the BSE Sensex ended up 200 points at 20393, Nifty ended up 67 points at 6056. The rupee also strengthened to 63.2 against the USD.

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BSE auto index ended the day at the top of the sectoral pack with gains of 2.9 percent; healthcare index closed 0.5 percent down - worst sectoral performer.

**Top Sensex gainers:**Tata Motors rose 5.2 percent, Tata Steel up 4.6 percent, ICICI Bank added 3.4 percent.

According to Deven Choksey,the market was looking slightly oversold in the absolute short-term, with several sessions of downward spiral, and hence some sort of a recovery was expected atleast as far as technicals go.

“The markets are kind of taking off because of the liquidity as well as from the fundamental point of view and the little bit of improvement in the macros that we are seeing,” Dipan Mehta, Member, BSE & NSE said in an interview with CNBC-TV18.

Meanwhile, India’s wholesale price index rose to an eight-month high in October, driven by costlier fuel and manufactured goods, raising the prospect of a fresh rate hike despite the central bank governor’s soothing words earlier on core retail inflation.The wholesale price index (WPI), climbed 7.0 percent in October, compared with 6.46 percent in September, the Commerce and Industry Ministry said on Thursday.

Sensex up 355 points, rupee recovers as Rajan woos market

11 AM The BSE Sensex gained over 350 points today, recovering from an oversold state after seven consecutive days of declines on easing fears of near-term tapering by the US Federal Reserve while domestic bonds gained on RBI’s open market operations announcement.

The BSE Sensex is up 355 points or 1.75 percent up at 20548.53 while NSE Nifty is up 106 points at 6096.

Shares in state-owned banks rally tracking gains in benchmark bonds after Reserve Bank of India governor Raghuram Rajan said it will buy bonds worth 80 billion rupees via open market operations (OMO) on Monday.

State Bank of India gains 1.9 percent, Canara Bank Ltd rises 3 percent, while Bank of India is up 5.1 percent.

BPCL shares are up nearly 4 percent, ONGC, IOC and HPCL are up more than 2 percent - top gainers in the BSE oil & gas index.Just Dial and Prestige Estates Projects rose more the 6 percent - top gainers in the BSE mid-cap index which is up 1.4 percent

Tata Steel shares are up 2.9 percent after the company’s second-quarter profit beat expectations on Wednesday, helped by a rise in prices and market share at home.

Natco Pharma surged 6 percent after prospects for its generic version for Teva Pharmaceutical Industries’ TEVA.TA billion dollar drug got a boost from a favourable US court ruling on Wednesday.

Nandan Chakraborty of Axis Capital advises investors to stay with defensive sectors like IT and Pharma and prefers export related rural themes for the short term.He sees 15 percent returns from market if rupee stabilises and sees unique business models in media and beverages to outperform in long term. ( Read more here)

Rajan effect again: Sensex soars nearly 300 points, rupee strengthens to 63

9:30 AM Indian equity markets jumped in opening trade today after RBI governor Raghuram Rajansought to calm the forex and bond markets which have been volatile this week after better US data sparked fears of US fed tapering. Andgiven that the market had witnessed some tightness in liquidity, the RBI is set to inject Rs 8,000 crore into the system through open market operations on Monday.

While the BSE Sensex jumped 280 points at20468, Nifty was up 81 points at 6071. Even the rupee strengthened to 63 against the US dollar after falling 5 percent in the last week.

“There is no fundamental reason for volatility in value of the rupee,” Rajan said yesterday. “At some time, it makes sense to take a deep breath and examine the fundamentals. I hope you all will do that.”

[caption id=“attachment_1168089” align=“alignleft” width=“380”]  After six days. the Sensex sees a rebound.[/caption]

The markets were also worried that the rupee would resume its free fall if oil companies start buying dollar from the forex market directly. The RBI had opened a special swap window for these companies to stem the rupee’s sharp decline during July-August. Requirement of oil companies is estiamted at $400-500 million daily. The swap arrangement had taken off demand for the dollar to that extend, thus taking the pressure of the rupee.

Tata Motors and ICICI Bank are up more than 3 percent, HDFC is up 2.5 percent.BSE bankex beganthe day at the top of the sectoral pack with gains of 2.5 percent; healthcare index is up only 0.6 percent - the worst sectoral performer.

However, India’s weak macro growth trends and stubborn inflation have not surprised Morgan Stanley’s Ridham Desai who says tackling inflation still remains a task and growth is likely to be tepid for want of strong fundamentals.

Speaking to CNBC-TV18, Desai a top notch economist at Morgan Stanley, points out at India’s failure to fix savings deficit will lead to volatility when US bond yields surges.

Desai is expecting a spike in US bond yields on the back of better-than-expected macro data. He also sees India falling prey to volatility on fears of US Federal Reserve tapering next year. Strengthening US data will not only draw flows back to the US from emerging markets but will also lead to deeper correction at home, Desai warns. The sell-off in equity markets will, however, not reach panic levels any time soon but a 10 percent downside on Sensex in next 12 months is possible. He is selectively bullish on banks and cautious on cyclicals.

Globally, the Dow and the S&P 500 ended at record highs on Wednesday as strong results from Macy’s lifted consumer discretionary shares and investors bought stocks in anticipation of remarks by Janet Yellen, who is likely to become the first woman to lead the Federal Reserve.

In the prepared remarks, Yellen said the US central bank has “more work to do” to help an economy and a labor market that are still underperforming, suggesting to some analysts that any scaling back of the Fed’s stimulus program might not be right around the corner. Yellen has been a strong supporter of the Fed’s bond-buying program.

With inputs from Reuters